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Why Intel Stock Popped Today

Shares of Intel (INTC 2.17%) rose as much as 4.6% early Friday, then settled to trade up 1.7% as of 3:30 p.m. ET after the company announced a new generative artificial intelligence (AI) chip that could rival competitive offerings from Nvidia (NVDA 1.12%) and Advanced Micro Devices (AMD 0.83%).

Intel gains ground in the AI chip race

Intel introduced several new chips at its AI Everywhere launch event in New York City on Thursday. But investors were arguably most excited after the company offered its first sneak peek at the new Intel Gaudi3 AI accelerator, a powerful chip focused on deep learning and large-scale generative AI models.

Intel says the Gaudi3 will offer a significant performance increase from its predecessor, the Gaudi2, that should make it competitive with rival AI accelerators already unveiled by both Nvidia and AMD. In its launch event press release yesterday, Intel added that it’s enjoyed a “rapid expansion of its Guadi pipeline due to growing and proven performance advantages combined with highly competitive TCO [total cost of ownership] and pricing.”

What’s next for Intel stock?

AMD stock also soared last week after the company launched its new line of large accelerated processing units (APUs) designed for AI workloads. AMD CEO Lisa Su suggested at the time that the new products should enable her company to “get a nice piece” of what they expect will grow into a more than $400 billion market opportunity for AI chips by 2027.

Nvidia currently dominates that industry, commanding an estimated 80% market share in AI chips and leaving plenty of room for competitors like AMD and Intel to muscle their way in. With Intel’s new Gaudi3 AI accelerator on schedule to arrive in 2024, it should be sufficiently early to capitalize on this mammoth opportunity.

Steve Symington has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short February 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.

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